No Way Dogecoin will Become The Currency of The Internet So Soon!
The ‘currency of the internet’ crown might not yet fit Dogecoin and here’s why.
Dogecoin started as a joke cryptocurrency but now has a market capitalization of US$7 billion and a huge global following. But it might just slip off from the chance to become “the currency of the internet” if the current condition continues.
Why could it become the ‘currency of the internet’?
Robinhood CEO Vladimir Tenev is a staunch supporter of the cryptocurrency Dogecoin. The CEO of the stock and crypto trading app believes that Dogecoin could become the “currency of the internet”. In a thread of 12 tweets posted on Thursday, Tenev explains how Dogecoin could truly be the future currency of the internet and the people. Firstly, he notes that the transaction fees to facilitate crypto transactions have to be “vanishingly small”. Tenev believes that Dogecoin is already there. “As of last November’s 1.14.5 update, typical transaction fees have been US$0.003— which you can experience on compared to the 1 to 3 percent network fees that major card networks charge,” he said in a tweet.
Need Change in the Block Time
The Robinhood CEO also shed light on the block time of Dogecoin transactions. Block time is the time required by the miners to mine a block and verify a transaction. “Block time should be fast enough that the transaction can be recorded in the next block in less time than it takes to pay at a point of sale terminal. But it shouldn’t be so fast that miners start building up to many competing chains and waste excessive amounts of energy establishing consensus,” he pointed out. Currently, Doge’s block time is 1 minute. Tenev is opined that it is a bit on the long side for payments – “a ten-second block time would be more appropriate as it would be less than the typical time spent completing a debit card transaction,” he adds.
Competition with Visa Transaction Speed
Tenev also drew a comparison between Dogecoin and Visa transaction speeds. He highlighted that with a 1MB block size and 1 minute block time, Dogecoin’s throughput is about 40 transactions per second (tps). As a comparison, Visa’s network can theoretically handle 65,000 tps. “Doge would need to be able to significantly outperform Visa, which entails increasing throughput by at least 10000x. Fortunately, this is easy to solve simply by increasing the block size limit,” he explained.
Clearing the air on criticism around Dogecoin, that it’s inflationary and the supply is infinite, as opposed to Bitcoin’s finite supply of 21 million coins, Tenev explained that 5 billion new Dogecoin tokens are created every year, and the current supply is about 132 billion. This results in a current inflation rate of less than 5 percent which is even less than USD.